Controversy Hits UK Oil and Gas Licensing

Spencer Hey
Offshore North Sea platform
Courtesy of the Telegraph

Sometimes in life, you must make decisions that you know people will disagree with. When it comes to energy policy in the UK, those decisions seem to happen every other day.

What happened: On Monday, UK Prime Minster Rishi Sunak confirmed that hundreds of new North Sea oil and gas licenses would be granted to “boost British energy independence and grow the economy”. The announcement comes alongside a government commitment to provide funding for two more carbon capture and storage hubs to further support decarbonization efforts.

The first set of new licenses are expected to be awarded in “the autumn”—a season in the UK where the weather changes from being cold and rainy on some days, to cold and rainy on most days.

Current North Sea oil and gas activity, 2023

Current North Sea oil and gas activity
Courtesy of the BBC and the North Sea Transition Authority

The opposition is fierce: Environmental groups and political opposition leaders were quick to respond, referring to the decision as anywhere from “a death sentence” to a “wrecking ball through the UK’s climate commitments”.

*cue Miley Cyrus*

But even with new licenses—not all of which will lead to new oil and gas fields being developed and operated—oil and gas production in the UK is still expected to decline well into 2050.

The carbon accounting might work

According to the North Sea Transition Authority, the UK’s oil and gas authority and an extension of the UK’s Department for Energy Security and Net Zero, recently published research suggests that gas produced domestically is nearly 75 percent less carbon intensive than the average LNG import.

  • This stems from not needing to liquefy and transport gas across the world.

Prime Minister Sunak said that the decision is “entirely consistent” with net-zero plans because, as some have forecasted, oil and gas may still make up 25 percent of the UK’s energy mix by 2050. Even in a net-zero scenario.

UK LNG import carbon intensity profile by country, 2022

kilograms of carbon dioxide per barrel of oil equivalent

UK LNG import carbon intensity profile by country
Courtesy of the North Sea Transition Authority

Mind the gap (sorry): Politically, the decision to continue supporting North Sea oil and gas production creates a clear divide between the UK’s two leading political parties.

  • The current opposition recently proposed to block all new domestic oil and gas drilling.

With an election coming in 2024, this stark policy difference could become a central issue for voters.

Bottom line: For those who believe that fossil fuels will remain part of the energy mix for decades to come—as the International Energy Agency and others suggest—then the decision to displace higher-carbon imports with lower-carbon domestic production is environmentally positive. And for those who believe that fossil fuels don’t belong in a net-zero world, then this decision represents a big step backward.

With another election around the corner and parties starkly opposed on energy policy, it seems like those looking for an ‘orderly transition’ are unlikely to find it in the UK.

+Additional readingNorth Sea gas almost four times cleaner than imports

+Dive inNSTA Offshore Emissions Monitoring Dashboard